A recent slump in the stock market is causing a major cash crunch for California.

A recent slump in the stock market is causing a major cash crunch for California.

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Updated: 7:39 PM PDT May 12, 2016

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WEBVTT MIKE: THE BILLION DOLLAR HIT IS FROM PERSONAL INCOME TAXES IN APRIL, THE MOST IMPORTANT REVENUE MONTH FOR THE STATE. AND IT MEANS GOVERNOR BROWN IS LIKELY TO HAVE SOME STERN WORDS TOMORROW, FOR THOSE INSIDE THIS BUILDING WHO WANT HIM TO SPEND MORE MONEY. A RECENT SLUMP IN THE STOC MARKET IS CAUSING A MAJOR CASH CRUNCH FOR CALIFORNIA. THE BILLION DOLLAR SHORTFALL COMES PRIMARILY FROM CAPITAL GAINS, THE TAXES PEOPLE PAY AFTER SELLING A STOCK. H.D. PALMER: CAPITAL GAINS IS ONE OF THE MOST IMPORTANT SOURCES OF REVENUE FOR PERSONA INCOME TAX, WHICH MAKES UP TWO THIRDS OF THE STATE BUDGET. WHEN THE MARKET'S NEEDS, -- MARKETS SNEEZE, THE BUDGET CAN CATCH A COLD. MIKE AND THAT COLD COULD AFFECT : KIDS, ESPECIALLY THOSE NEEDING CHILD CARE WHILE THEIR PARENTS WORK. NANCY GRAY IS A CHILD CARE PROVIDER WHO TAKES CARE OF 14 KIDS WITH AN ASSISTANT. SHE SAYS MANY FAMILIES OUT THERE ARE STRUGGLING. NANCY GRAY: ONE OF THEM FOR A WHILE THERE WAS PAYING ME HER ENTIRE PAYCHECK, JUST TO GET CHILDCARE STARTED FOR HER CHILD -- SHE WAS A BABY. MIKE: CHILD CARE IS A HIGH PRIORITY FOR THE LEGISLATIVE WOMEN'S CAUCUS. HANNAH BETH-JACKSON: WE HAVE PUT IN TO THE GOVERNOR. WE'VE ASKED FOR $800 MILLION AGAIN THAT'S TO PROVIDE AN INCREASE IN RATES. MIKE: BUT CHILD CARE IS NOT THE ONLY DEMAND AT THE CAPITOL. THERE'S ALSO PRESSURE TO SPEND MORE TO IMPROVE CALIFORNIA'S CRUMBLING ROADS, AND DEMANDS FOR MORE DOLLARS FOR DENTI-CAL. REPUBLICANS ARE ASKING FOR AN ADDITIONAL $200 MILLION TO FUND THIS PROGRAM FOR LOW-INCOME CALIFORNIANS BUT SENATOR JOHN MOORLACH, A FORMER CERTIFIED PUBLIC ACCOUNTANT, SAYS HIGHER TAXES ARE NOT THE ANSWER. SEN. JOHN MOORLACH: WE CANNOT BE THE BAND ON THE DECK OF THE TITANIC. WE'VE GOT TO START ADDRESSING TOMORROW TODAY. MIKE: AND THE MESSAGE FROM GOVERNOR BROWN TOMORROW WILL MOST LIKELY BE ABOUT BELT TIGHTENING. HD PAMLER: THE WORST THING WE COULD DO NOW IS COMMIT THE STATE TO HIGHER ONGOING LEVELS OF SPENDING, ONLY TO HAVE TO CUT BACK WHEN -- NOT IF -- BUT WHEN WE GET TO THE NEXT ECONOMIC DOWNTURN MIKE: GOVERNOR BROWN WILL PROVIDE DETAILS OF HIS MAY BUDGET PLAN TOMORROW MORNING AT 10:00 INSIDE THIS BUILDING REPORTING FROM THE STATE CAPITAL, MIKE LEURY, KCRA 3 NEWS. KELLIE: MIKE, WE HEAR SO MUCH ABOUT THE SO-CALLED 1%. HOW MUCH DO THEY CONTRIBUTE TO THE STATE BUDGET? MIKE: THE LATEST FIGURES FROM THE FRANCHISE TAX BOARD SHOW THE TOP EARNERS. THE ONE PECENTERS PAY 48% OR NEARLY HALF OF ALL PERSONAL INCOME TAXES IN CALIFORNIA. SO WHEN THEY HAVE A BAD DAY ON

How California’s billion-dollar shortfall could affect you?

A recent slump in the stock market is causing a major cash crunch for California.